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Posts Tagged ‘National Sample Survey Organisation

Asia’s epic urban sagas

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Courtesy UN-Habitat: Waterside shanties in the Philippines.

Courtesy UN-Habitat: Waterside shanties in the Philippines.

National governments and planning authorities in Dhaka, Islamabad and New Delhi are tending more and more to follow a single ideology – economic growth will drive down poverty – and a primary route to that misplaced objective, which is greater urbanisation. These governments are therefore commissioning a welter of studies and reports, from within and without, to show their citizens why more cities and towns are a good thing (jobs and citizen services, they say) and why mobilising a great deal of money to build infrastructure for these settlements is a good thing (more jobs, more ‘development’).

The cleverer authorities are linking South Asia’s rising urban trendline to a variety of socio-economic goods, such as product and monetary innovation, such as cities being the wellsprings of social entrepreneurship, such as greater tax receipts which will help accumulate funds for social sector spending on the poor and marginalised. For companies and banks that deal with the building of big infrastructure, its engineering, its operation and its financing, this is a persistent swell of good news, and this group is doing everything it can to sustain the urbanisation wave.

[You can find my full essay at Energy Bulletin]

The raw numbers are on the side of the powerful urban-centric cabal. Among the world’s cities ranked by average population growth rate per year (in per cent) for 2006-2020, there are 37 South Asian cities (Afghanistan 1, Bangladesh 3, India 25, Pakistan 8) and 8 in China in the top 100. In the next 100, there are 20 cities in China and 11 in India. Asia’s two biggest countries have between them 64 of the top 200 cities that are projected, by the global group of city mayors, to grow the fastest in the next decade. This extraordinary prognosis for the two most populous countries – both of which have become economic powers – has enormous implications for global energy, food and resource flows.

When China and India buy material (as they have been doing, with China’s headstart over the rest of the BRIC/BASIC group placing it in a league of resource acquisition by itself), entire populations of supplier countries will face the consequences. Moreover, much of the material the two countries will commandeer will be directed towards their cities. China’s urban population is already 45% of its total population, while India’s is 30% and set to grow faster than it has at any period until now. There are combined numbers so large in the cities of China and India that the implications of the consumption by this grouping alone have become too profound to internalise for planners and administrators. Amongst the 300 most populous cities in the world, 97 are in China and these 97 are home to 243.98 million people (2010 estimate); 26 are in India and these 26 are home to 90.38 million people (2010 estimate).

In the state of Goa, western India, new residential blocks loom over shrinking fields.

In the state of Goa, western India, new residential blocks loom over shrinking fields. The produce from such fields once fed the capital city of Panaji, which now imports food 130 kilometres from the neighbouring state of Karnataka

What do we know about India’s food consumption patterns? Let’s look at some numbers to illustrate this. India’s most admirable National Sample Survey Organisation has just begun releasing summary data from its 2007-08 survey of household consumption (the earlier such ’round’, as it is called, pertained to the 2004-05 period). In rural India, average monthly per capita cereal consumption was around 10.3 kg for the poorest 10% of the population. (The survey distributes both rural and urban populations by ten ‘deciles’ – bands of 10% – which correspond to level of consumption expenditure.) It was between 11 and 12 kg for each of the next six decile classes, and was above 12 kg for the top three decile groups.

This means that for rural India, there is a strong positive correlation between ability to spend on food and quantum of consumption of cereals – the greater the household income, they more it is able to spend on staple foodgrain. In urban India, per capita cereal consumption increased from under 9.5 kg to about 10 kg per month over the first four decile classes but then showed a tendency to fall slightly rather than to rise in parallel with further increases in total expenditure.

This indicates the fulfilment of staple foodgrain needs and that expenditure on food thereafter is on cereal substitutes, processed food or eating out (what the surveys call ‘purchased cooked meals’), and fruit. Average cereal consumption per person per month was 11.7 kg in rural India and 9.7 in urban India. From this it would appear that the average urban person’s monthly cereal intake was about 2 kg less (a difference of 67 gm per day) than that of the average rural person. But it needs to be factored in that in urban areas the cereal content of processed foods and eating out (‘purchased cooked meals’) gets left out in the estimation of cereal consumption, which is why the difference in cereal consumption between the two may be less than it appears.

The FAO food price index plotted from 2000 to early 2010

The FAO food price index plotted from 2000 to early 2010

India’s urban national average of per capita daily cereal consumption is 9.7 kg. At this average, we are able to gauge the cereal supply needs of cities with populations of over a million. Using population estimates for 2010 (from the City Mayors website database) we find:

Pimpri-Chinchwad (Maharashtra) with a metro population of 1.515 million consumes 483 tons of cereals a day
Nagpur (Maharashtra) with a metro population of 2.42 million consumes 772 tons of cereals a day
Varanasi (Bihar) with a metro population of 3.15 million consumes 1,005 tons of cereals a day
Ludhiana (Punjab) with a metro population of 4.40 million consumes 1,403 tons of cereals a day
Hyderabad (Andhra Pradesh) with a metro population of 6.29 million consumes 2,006 tons of cereals a day
Kolkata (West Bengal) with a metro population of 15.42 million consumes 4,918 tons of cereals a day
Mumbai (Maharashtra) with a metro population of 21.2 million consumes 6,761 tons of cereals a day

These daily consumption demands mean movement, by road and rail, of food produce citywards at prodigious scales. In Navi Mumbai, an urban satellite of Mumbai which is a fair-sized city by itself today, lies the food wholesale depot that marshals and redirects the daily procession of trucks, lorries, light commercial vehicles and pick-ups bringing food for Mumbai’s millions. The number of vehicular movements in this yard are reckoned to be over 2,000 every day which indicates the vast physical reach of the giant city’s food gathering subsystem, one that holds in its thrall a region that could comfortably encompass western Europe.

Shrinking cereals, growing food parks

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Local grain in Mapusa market, North Goa

Local grain in Mapusa market, North Goa

This short comment has been written for India’s alternative economics group, Macroscan, and you’ll find it here.

The first release of summary data from the 64th round of the National Sample Survey Organisation, ‘Household Consumer Expenditure in India 2007-08‘ (NSSO report 530), captures the early impact of the rising trend in food prices for rural and urban India. This period is significant in the recent history of food price rise in India, for it signals the strengthening of the factors that led to the retail food price highs of 2008 which began to be recorded around two years earlier. Several of the most important factors have to do with the rapid pace of urbanisation (most visible in the non-metro tier 1 cities) and the steady growth in the food processing and food logistics industries, which has taken place alongside the deepening of the agricultural commodity markets.

“To judge from survey data of food intakes, the situation has been getting worse rather than improving, at least in terms of per capita calories consumed, and this phenomenon is fairly widespread affecting all classes, rural and urban and those below and above the poverty threshold,” the FAO report, ‘World agriculture: towards 2030/2050‘ had stated in 2006 in its comment on India’s growth-malnutrition paradox. The report’s authors had at the time commented that matters in India “are getting worse in the rural areas as people have to pay more than before for things like fuel and other basic necessities of life” and that rural incomes have not improved at anything near the rates implied by the high overall economic growth rates.

To illustrate the continuing impact of rising cereal prices on rural households in Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh and Orissa, district per capita incomes for 2004-05 to 2009-10 are estimated for five representative districts from these states. These are districts that record a median per capita income based on data for the 2004-05 year (the last NSSO household consumption survey year) available with the Planning Commission’s district domestic product tables: Bhabua in Bihar, Dhamtari in Chhattisgarh, Deoghar in Jharkhand, Khandwa in Madhya Pradesh and Jajpur in Orissa. The per capita income increases in these districts are recorded upto 2006-07, and taking the national GDP growth rate for the years following (9.7%, 9.2%, 6.7% and 7.2%) the overall finding is that statistical per capita income increases are between 36% (for Khandwa) and 47% (for Dhamtari) for the period 2005-06 to 2009-10.

Expenditure on food and non-food needs, Indian states

Expenditure on food and non-food needs, Indian states

In these five states, the cereals basket occupies a dominant share of monthly per capita expenditure (MPCE) on food, accounting for 42% of MPCE on food and 25% of total MPCE in Bihar, 41% and 21% in Chhattisgarh, 42% and 25% in Jharkhand, 33% and 17% in Madhya Pradesh, and 42% and 24% in Orissa. The impact of a steady upward trend in the prices of cereals in these states – whose rural households spend roughly the same on food as they do on non-food needs (see Chart 1) – can be gauged from retail price data on essential food items collected by the Department of Economics and Statistics, Ministry of Agriculture. This data, although the most reliable weekly series recorded in a number of centres in the country, is weakened by deficiencies (gaps in series, numerical mismatches and so on). Even so, the patterns they provide are valuable.

From 2005 January to 2010 January, the prices of atta in Sehore and Bhopal (MP), of desi wheat in Bhopal and of maize in Patna have risen by 200%. The prices of ‘kalyan’ wheat (a widespread HYV cultivar) in Bhopal, Sehore and Patna (Bihar) have risen by 173% to 177%; the prices of maize in Ranchi (Jharkhand) and common quality rice in Bhubaneshwar (Orissa) have risen by 171%; the prices of ‘desi’ wheat in Patna and atta in Ranchi have risen 170%; and the prices of common rice in Cuttack and in Dhanbad (Jharkhand) have risen by 169% and 164%. Over this period, the price of the available basket of cereals has risen 157% in Cuttack, 162% in Bhubaneshwar, 159% in Sehore, 174% in Bhopal, 176% in Patna, 166% in Ranchi and 152% in Dhanbad.

Erratic data posting (and possibly validation difficulties) have meant that a better understanding of the food baskets of North-East India is yet to be achieved. Even so, NSSO 530 shows the heavy reliance by the households of the North-Eastern states on cereals (rice) with the regional average consumption greater than that of the states of eastern and central India in which rice also play a major dietary role: West Bengal, Orissa, Chhattisgarh, Bihar and Jharkhand. What Chart 2 illustrates is that for those regional populations dependent on rice, the cost of this dependency is high.

Cereal consumption and prices, Indian states

Cereal consumption and prices, Indian states

This is not so for wheat in Punjab and Haryana, whose average per capita consumption quantity of the cereal is both relatively low (as a percentage of the cereal component of the food basket) and less expensive. For Gujarat, Maharashtra and Karnataka – all three states affected by rapid urbanisation and absorbed by the race to build urban and transport infrastructure – their rural households are far less dependent on a single cereal than their counterparts in North-East, Eastern or North India. Wheat is the preferred cereal in Gujarat but accounts for no more than 40% of the total cereals purchase; rice is the preferred cereal in Karnataka but accounts for no more than 53% of the total cereals purchase; wheat is the preferred cereal in Maharashtra but accounts for no more than 36% of the total cereals purchase.

Food inflation is now a concern for the Reserve Bank of India (RBI) which has begun to make direct causal links between per capita availability of foodgrains and high retail prices. Deepak Mohanty, executive director of RBI, in an address on ‘Inflation Dynamics in India: Issues and Concerns’ (March 2010) has also drawn a connection between food prices the minimum support price (MSP) announced by the Government of India for procurement of various commodities. “The high increase in MSP since 2007-08 has given an upward bias to agricultural prices. Reduced availability of foodgrains also tends to keep food prices high. As per the Economic Survey 2009-10, per capita net availability per day of cereals and pulses has been lower than that observed in the previous four decades. The per capita daily availability of foodgrains was 447 grams in the 1960s and 1970s, which successively increased to 459 grams in the 1980s and 478 grams in the 1990s but came down to 446 grams during 2000-08 and stood still lower at 436 grams in 2008.”

At the same time, the Government of India has approved proposals for joint ventures and foreign collaboration (including 100% FDI) in processed food businesses (including 100% export oriented units), and “mega food parks”. According to Indian Credit Rating Agency (ICRA), the processed food market accounts for 32% of the total food market with the “most promising” sub-sectors listed as soft-drink bottling, confectionery manufacture, fishing, aquaculture, grain-milling and grain-based products, meat and poultry processing, alcoholic beverages, milk processing, tomato paste, fast-food, ready-to-eat breakfast cereals, food processing, food additives and flavours. From the point of view of the major national industry associations (CII, FICCI, Assocham) the approximately 7,500 regulated mandis lack critical infrastructure, the provision of which will cost at least Rs 12,000 at 2009 prices. The potential of the public-private partnership model in the foods business is seen by industry as being embodied in ventures such as Safal market in Karnataka (considered an example of wholesale market modernisation), ITC’s e-Chaupal, Hariyali Kisan Bazaar, Mahindra Shubh Labh, Cargill Farmgate Business and Tata Kisan Sansar.

Removed from such a view are the recurrent protests since late 2009 in a number of urban centres over food inflation, urgent signals that the increasing corporatisation of food production, procurement, movement and distribution is contributing to household food insecurity, particularly amongst the rural and urban poor. The ‘Report on the State of Food Insecurity in Rural India‘ (M S Swaminathan Research Foundation) explicitly stated that “over the longer period of 1993-94 to 2004-05, the states of Karnataka, Orissa and Madhya Pradesh show significant increase in the percentage of population suffering acute calorie deprivation. On the whole, it is clear that, by our measure of food insecurity, the period of economic reforms and high GDP growth has not seen an improvement in food security but deterioration for the majority of Indian states.”

25 paise/kg more every month

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That’s what food inflation has meant in most of rural India from December 2007 to December 2009/January 2010. The price per kilo of two staples – wheat and rice – has risen steadily for the last three years, together with the prices of pulses, other cereals, fuel and light. Over these two years, the per month increase in the price of wheat is around Rs 0.25/kg.

The confirmation comes from the new National Sample Survey Organisation’s new report on Household Consumer Expenditure in India 2007-08 (released in March 2010) based on the NSS 64th Round (July 2007 to June 2008).

I’ve done some quick comparisons between what NSS 64 has reported and the retail prices monitoring cell of the Department of Economics and Statistics, Ministry of Agriculture, which has the machinery to monitor food and non-food goods for around 70 cities and towns in India.

Here are some results for wheat:

NSS 64 records the Maharashtra rural average price of wheat per kg at Rs 10.69 with a per person average consumption of 3.7 kg per month. A month’s wheat for a person in rural Maharashtra in Jan 2007 cost Rs 32 whereas now it costs Rs 50.70 (that’s 58% up). The average retail price in Nashik and Aurangabad (Maharashtra) in Jan 2010 was Rs 16.90/kg.

NSS 64 records the Rajasthan rural average price of wheat per kg at Rs 10.07 with a per person average consumption of 8.2 kg per month. A month’s wheat for a person in rural Rajasthan in Jan 2007 cost Rs 82.50 whereas now it costs Rs 127.10 (that’s 54% up). The average retail price in Dausa, Jaipur, Jodhpur, Sawai Madhopur and Udaipur in Dec 2009 was Rs 15.50/kg.

NSS 64 records the Gujarat rural average price of wheat per kg at Rs 10.39 with a per person average consumption of 4 kg per month. A month’s wheat for a person in rural Gujarat in Jan 2007 cost Rs 41.55 whereas now it costs Rs 78 (that’s 87% up). The average retail price in Gandhinagar, Surat and Vadodara in Jan 2010 was Rs 19.50/kg.

NSS 64 records the Bihar rural average of wheat per kg at Rs 11.58 with a per person average consumption of 5.3 kg per month. A month’s wheat for a person in rural Bihar in Jan 2007 cost Rs 61.35 whereas now it costs Rs 87.45 (that’s 42% up). The average retail price in Gaya, Hajipur and Muzaffarpur in Jan 2010 was Rs 16.50/kg.

NSS 64 records the Haryana rural average of wheat per kg at Rs 9.02 with a per person average consumption of 9 kg per month. A month’s wheat for a person in rural Haryana in Jan 2007 cost Rs 81.20 whereas now it costs Rs 132.30 (that’s 63% up). The average retail price in Hissar and Karnal in Jan 2010 was Rs 14.70/kg.

What they spend their rupee on

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Volunteers at a rally, Mumbai, India

Volunteers at a rally, Mumbai, India

The data have just been released of the National Sample Survey Organisation’s 64th Round, on Household Consumer Expenditure in India, 2007-08 (survey period July 2007 – June 2008). The Ministry of Statistics and Programme Implementation, Government of India, has put out the findings in its report No 530. A sample of 31,673 rural households and 18,624 urban households spread over the entire country was surveyed in the Consumer Expenditure Survey of the 64th round. The highlights:

Level of consumption in 2007-08

1. Average Monthly Per Capita Consumer Expenditure (MPCE) in 2007-08 was Rs.772 in rural India and Rs.1472 in urban India at 2007-08 prices. About 65% of the rural population had MPCE lower than the national rural average. For urban India the corresponding proportion was 66%.

2. The survey estimated that in 2007-08, around one-half of the Indian rural population belonged to households with MPCE less than Rs.649 at 2007-08 prices. In 2006-07, the corresponding level of MPCE for the rural population had been estimated as Rs.580.

Rytu (farmer) of north Karnataka

Rytu (farmer) of north Karnataka

3. In urban India, one-half of the population belonged to households with monthly per capita consumer expenditure less than Rs.1130. In 2006-07, the corresponding level of MPCE for the urban population had been estimated as Rs.990.

4. About 10% of the rural population had MPCE under Rs.400. The corresponding figure for the urban population was Rs.567, that is, 42% higher. At the other extreme, about 10% of the rural population had MPCE above Rs.1229. The corresponding figure for the urban population was Rs.2654, that is, 116% higher.

5. Real MPCE (base 1987-88) was estimated to have grown by about 21% from 1993-94 to 2007-08 (that is, over a 14-year period) in rural India and by about 36% in urban India. The annual real terms increase from 2006-07 to 2007-08 in average rural MPCE was 2.2% and in average urban MPCE was 5.4%.

Pattern of consumption in 2007-08 and share of food

1. Out of every rupee of the value of the average rural Indian’s household consumption during 2007-08, the value of food consumed accounted for about 52 paise. Of this, cereals and cereal substitutes made up 16 paise, while milk and milk products accounted for 8 paise.

Crowds at a religious gathering in Mumbai, India

Crowds at a religious gathering in Mumbai, India

2. Out of every rupee of the value of the average urban Indian’s household consumption during 2007-08, the value of food consumed accounted for about 40 paise. Of this, cereals and cereal substitutes made up 9 paise, while milk and milk products accounted for 7 paise.

3. While the share of most of the food item groups in total consumption expenditure was higher in rural India than in urban India, fruits and processed food were exceptions. For non-food item groups, the share was usually higher in urban India. The noticeable differences were in case of rent (urban share: 6%, rural share: 0.4%), education (urban: 7%, rural: 3.7%), consumer services other than conveyance (urban: 7.8%, rural: 4.5%), and conveyance (urban: 6.4%, rural: 4%).

4. The share of milk and milk products in total consumption expenditure was found to rise steadily in rural India with MPCE level from under 3% in the bottom decile class to nearly 10% in the ninth decile class. The share of fuel and light was about 12% for the poorest decile class of the rural as well as of the urban population and fell steadily with rise in MPCE to 7% for the top decile class in rural India and to 6% in urban India.

5. The share of food in total consumption expenditure of rural households varied among the major states from 41% for Kerala and 44% for Punjab to 58-60% for Orissa, West Bengal, Jharkhand, Assam and Bihar. In the urban sector the share of food expenditure varied between 36% (Kerala and Chhattisgarh) and 47% (Assam and Bihar).

6. Tobacco was consumed in as many as 61% households in rural India compared to 36% households in urban India. About 62% of rural households and 59% of urban households were estimated to have consumed egg, fish or meat during the last 30 days. In non-food items, consumption on account of entertainment was reported by 28% of rural households and 63% of urban households. Consumer expenditure for rent was reported by only 7% of rural households and 38% of urban households.